Hybrid vehicles may include an automatic transmission having a torque converter and associated torque converter clutch. The amount of torque transmission ability of the torque converter clutch may be referred to as the torque converter clutch capacity and may be controlled while the clutch is slipping by adjusting the hydraulic pressure applied to the torque converter clutch. Accurate determination of the torque converter clutch capacity facilitates control of torque delivery to the vehicle wheels for desired drivability under varying vehicle and ambient operating conditions. One strategy for determining the torque converter clutch capacity uses a static torque converter clutch model that predicts the transfer function between clutch pressure and torque capacity. While this strategy is acceptable for the majority of operating conditions in many applications, vehicle drivability may be less than optimal under some conditions.